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The Earl of Onslow: My Lords, will the Minister say what the minimum wage should be and what is a living wage?

Baroness Hollis of Heigham: My Lords, the noble Earl will be aware that we are setting up a low pay commission which will make recommendations to us based on consultation with all the employers and employees concerned.

Baroness Blatch: My Lords, will the Minister give way, because it is an interesting point? Is she saying that the Government will be bound by the commission's recommendations or be advised about the level of a minimum wage?

Baroness Hollis of Heigham: My Lords, we shall be advised by it, but I understand that we will take the advice extremely seriously.

A second example of unwise government expenditure, wasting welfare moneys, is that the Conservative Government deregulated private rents and in a decade housing benefit in real terms more than doubled to £11 billion today. Landlords did not invest that extra rent, courtesy of the taxpayer, but pocketed it. Meanwhile many tenants on housing benefit found that they could not afford to work as they lost 93p in benefit deductions from every pound in wages. We trapped them because we spent welfare money on the wrong thing, subsidising the greedier private landlord's rent rather than investing in the supply of socially rented housing which would help drive down rents. We will release council house receipts, add to the supply of social housing and to the wealth of the country, and thereby begin to spring that trap.

Again, during the past 18 years we have used benefits to subsidise inertia, to encourage passivity. I know that the previous government produced a few pilot schemes in their last year of office, but it was too little, too late. For years we have allowed young people and lone parents to face a decade or more on the dole. We have left them to linger there. We know that they want to work, full-time or part-time according to their family responsibilities. The noble Earl, Lord Russell, was right in saying that we must work with the wishes and choices of lone parents. They want to own their lives. But today's welfare state discourages them from working. Too often it is not financially worth coming off benefit; for others it is financially risky to do so. Tomorrow's welfare state will be on their side, offering training,

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reskilling, education and child care; it will provide bridges for them to a decent future. Because too many people have lingered on twilight benefits for too long, they carry the poverty of their working age into a poverty of old age. A quarter of all pensioners now depend on income support, though not all of them claim what they should. We will get help to the poorest pensioners. We will also ensure that people at work today have a good second pension to lift them off poverty in retirement.

But if we are to renew the welfare state, as I believe we must, we must restore faith in its integrity. So we have to take firm action to counter fraud. Fraud not only wastes money, it wastes good will. If people believe the welfare state is being abused, they will be tempted to abuse it themselves. None of us, certainly not people on benefit, can afford a culture of fraud and fiddling. Our actions will not only allow money to be used more wisely, but will mean that those who rightly will continue to depend on benefit will receive their entitlements without stigma and with dignity.

Our first step will be to bring forward, in the first Session, a Bill which will pave the way for the modernisation of social security delivery. This Bill will make changes in two main areas. First, it will introduce changes designed to simplify the process for making decisions and hearing appeals. Some of the current processes were developed before 1948 and much was introduced before the advent of computers. The complexity of the system confuses both claimants and the staff who have to operate it. It also constrains the design of new technology to improve service delivery. We will improve customer service through faster, more accurate decisions. We hope that as a result the system will be less prone to error and easier for public and staff to understand. The simplifications will pave the way for the developments of more effective benefit processes and of supporting technology to improve the delivery of benefits and make the system more cost effective.

Secondly, the social security modernisation Bill will contain a range of measures which will improve the procedures for the collection of National Insurance contributions. A key element of these proposals is further alignment of tax and National Insurance contributions arrangements to reduce burdens on business. We will also streamline the procedure for collecting them by introducing a new and more appropriate financial penalty regime for the Contributions Agency following on the success of regimes operated by the Inland Revenue and Customs & Excise to combat tax evasion. This is a well-balanced package of measures. In the delivery of benefits it will make the system more cost effective while enabling real improvements in customer service. The proposed measures on National Insurance will reduce burdens on compliant businesses while getting tough on those who evade paying contributions which are due.

Let me turn to another area of social security; that is pensions and divorce. The House will know the commitment of your Lordships--in particular, the noble Baronesses, Lady Young and Lady O'Cathain, on the Conservative Benches, the noble and learned Lord, Lord Simon of Glaisdale, on the Cross Benches, and

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the greatly missed Lady Seear on the Liberal Democrat seats--to pension-sharing on divorce. Together, we overcame government opposition to pension sharing. That measure now has all-party support around this House. It will lead to fairer financial settlements at divorce and allow a better income, particularly for women, in retirement. The previous Government's consultation paper has been widely, and rightly, welcomed. In that, the noble Lord, Lord Mackay of Ardbrecknish, gamekeeper turned poacher, played no small part. I am determined that despite a heavy legislative programme ahead, we shall not let slip the previous Government's date to implement pension sharing by April 2000.

I turn now to health matters. The Government are committed to abolishing the NHS internal market and taking steps to ensure that all patients have equal access to high-quality care in accordance with their need.

The problems of the NHS internal market require early action. The Secretary of State has already put this in hand through programmes of work, first, to see how resources can be distributed across both secondary and primary care, to ensure that they fully reflect local population needs and operate as fairly as possible; secondly, to tackle two-tierism, to ensure that fundholders do not enjoy unfair financial advantages, and that non-fundholders' patients do not suffer disadvantage; and thirdly, to tackle, the current paper-chase--cutting down on the flow of invoices, streamlining the existing system and learning from good practice on longer-term contracts.

Moreover, the private finance initiative in health has been dogged by a lack of progress since its introduction in 1992. The Government will introduce a Bill at an early opportunity to clarify the powers of NHS trusts to enter into those agreements. The legislation will unblock the PFI in health, enabling major hospital projects to proceed without delay.

The Government are committed also to introducing a ban on tobacco advertising. Smoking is a complex and difficult issue. A ban may be the single most important step that the Government can take to help to reduce the number of people who smoke and to prevent youngsters taking up the habit. However, we recognise that that is part of a well thought out overall strategy to tackle the greatest single cause of preventable illness and premature death in the UK. That is why we announced a White Paper on wider measures to reduce tobacco consumption.

I turn now to the other issues raised by your Lordships in the course of the debate. With some 35 speakers, your Lordship will understand that I cannot reply to all questions. Indeed, to reply to the 36 questions of the noble Baroness, Lady Blatch, alone would take 20 minutes. Therefore, I hope that your Lordships will permit me to write.

I turn first to the constitutional issues raised by your Lordships. The noble Baroness, Lady Blatch, emphasised that in her view, devolution undermines the Union. That position was stoutly attacked and our proposals stoutly defended by my noble friends Lady Ramsay and Lord Ewing in splendid speeches

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which emphasised that devolution is not independence; that, indeed, devolution is the best and only way in which to repair a Union of the UK long now under strain. The lack of Conservative MPs in Scotland and Wales does not suggest that the views of the noble Baroness, Lady Blatch, are widely supported by Welsh and Scottish people, as the noble Lord, Lord Rees-Mogg, suggested.

The noble Baroness, Lady Blatch, referred to the West Lothian question, as did the noble Lord, Lord Owen. Scotland retains a major interest in Westminster matters. Therefore, it is right that it should keep Scottish MPs, especially when we come to discuss the dispersal of UK resources. The UK Parliament will continue to have full responsibility for the overall interests of the UK and it is essential that Scotland's voice is heard at Westminster.

I was asked why Wales should be treated differently from Scotland. The reason is that Scotland has a different legal system to which the devolution proposals should conform.

I was asked whether we would reduce the number of Scottish MPs at Westminster. No, we shall not. I was asked whether there will be Secretaries of State for Scotland and Wales at the Westminster Parliament. My Lords, yes. I was asked who will pay the tartan tax. That will be determined by residency, as will the question of who will be entitled to vote, including the right of Peers. I hope that noble Lords will accept from me that other and detailed questions which have been raised tonight must await answer in the White Paper.

The noble Baroness, Lady Carnegy of Lour, asked how the voters would know the details on which they will be asked to vote. The White Paper will be published in the summer, well in advance of the referendum in the autumn, and we have every reason to believe that the voters will be well informed.


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